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GENEVA (Kyodo) Foreign direct investment into Japan in 2005 totaled $2.8 billion, or 330 billion yen, down 64 percent from 2004 and the lowest level in a decade, the U.N. Conference on Trade and Development said in a report released Monday.

The government will find it hard to reach its goal of raising the cumulative total of foreign direct investment above 26 trillion yen by 2011, according to the UNCTAD World Investment Report 2006.

It blamed the decline in inward FDI last year partly on a government decision to postpone until next May 1 approval of so-called triangular mergers, which would allow a Japanese subsidiary of a foreign firm to take over a Japanese company by swapping some of its parent’s stock for the target company’s shares without putting down any cash.

The report also notes that the 2005 figure was pushed lower by the withdrawal of Britain’s Vodafone Group PLC from the Japanese mobile services market and the sale by General Motors Corp. of most of its stake in Suzuki Motor Corp.

The combined value of foreign direct investment worldwide in 2005 surged 29 percent to $916 billion, rising for the second straight year, according to the report.

By destination, the biggest recipient of foreign investment was Britain, which attracted $164.5 billion, overtaking the U.S. at $99.4 billion. Third place went to China, which saw $72.4 billion in FDI.

The report says China is likely to step up direct investment overseas to allay foreign criticism of its huge trade surplus and foreign currency reserves, just as Japan did in the 1980s.

Persian Gulf states, including the United Arab Emirates, doubled their direct investment in other economies in 2005 compared with the previous year, against the backdrop of surging crude oil price.

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